Zambia plans to sign a deal with Standard Chartered Plc and Citigroup Inc. for a syndicated loan of as much as $250 million in the next two weeks, said Fredson Yamba, secretary to the Treasury.
The loan will help fund infrastructure projects that are widening the budget deficit, Yamba said. That shortfall will probably reach 8.5 percent of gross domestic product in Africa’s biggest copper producer this year compared with a target of 5 percent, according to International Monetary Fund forecasts.
“We’ve been having discussions for the past one month,” Yamba said by mobile phone from Lusaka, Zambia’s capital, today. “We received the term sheets, which we’ve been studying.”
Zambia is increasingly looking to foreign lenders to fund government plans to build new roads and power plants and upgrade rail lines as it seeks to pull the nation’s 13 million people out of poverty. Tapping international debt markets offers cheaper financing and prevents the government from crowding out private borrowers, Yamba said, adding that talks over the terms of the loan are continuing.
Zambia sold its debut Eurobond in September last year, raising $750 million in a sale that attracted investor demand of 24 times the government’s initial target, according to the Finance Ministry.
Zambia’s kwacha gained 0.7 percent to 5.295 per dollar by 4:15 p.m. in Lusaka. Yields on the Eurobonds due September 2022 fell for a second day to 7.38 percent.
Kenya agreed to a $600 million two-year syndicated loan in May last year, and Tanzania is considering proposals from banks for a $700 million loan, a government official said last month.